NEWMARKET, Ontario, Aug. 13, 2024 (GLOBE NEWSWIRE) -- AirBoss of America Corp. (TSX: BOS) (OTCQX: ABSSF) (the “Company” or “AirBoss”) today announced its second quarter 2024 results. The Company will host a conference call and webcast to discuss the results on August 14^th at 9:00 a.m. (ET), the details of which are outlined below. All dollar amounts are shown in thousands of United States dollars ("US $" or "$"), except per share amounts, unless otherwise noted.

Recent Highlights

• Commenced shipments in the third quarter of 2024 under AirBoss Manufactured Products' defense business’ recently-announced contract valued at up to $45 million to provide its Bandolier multipurpose energetic system to a NATO partner nation;
• Declared a quarterly dividend of C$0.035 per common share;
• Retained TD Securities Inc. as its financial advisor to assist the Company with its strategic review of various alternatives to create value for shareholders; and
• Received court approval of the settlement of the class action lawsuit which was pending against the Company in Canada.

"Despite the continued economic slowdown occurring in North America, which impacted both AirBoss Rubber Solutions ("ARS") and AirBoss Manufactured Products ("AMP"), the Company remained focused on operational execution, aggressive deleveraging and cost management, as we drove our strategy to broaden and grow ARS while refocusing on core product lines at AMP," said Chris Bitsakakis, President and Co-CEO of AirBoss. "Although both segments continued to experience softness in the past quarter, we are encouraged by the recently announced Bandolier awards that have begun shipping in the third quarter of 2024 as well as increased momentum in the CBRN markets, which are expected to drive improved performance at AMP in the second half of 2024 and into 2025 and beyond."

"Management continues to be focused on prioritizing investments and growth that will drive long-term shareholder value," added Gren Schoch, Chairman and Co-CEO. "We also continued to work on executing the previously-announced strategic transition, and have retained TD Securities Inc. as our financial advisor to assist in our review of various alternatives to create value for shareholders. In addition to the continued momentum at the Company as we execute our long-term strategy, we note that the courts approved the settlement of the class action lawsuit which was pending against the Company in Canada, which will conclude this matter."

_{¹ See Non-IFRS and Other Financial Measures.
² Debt as at June 30, 2024 and December 31, 2023 include lease liabilities of $13,128 and $13,890, respectively.}

Financial Results

Consolidated net sales for Q2 2024 decreased by 16.4% to $95,367 compared with the second quarter of 2023 ("Q2 2023") and for 2024 year-to-date decreased by 14.0% to $198,857 compared with 2023 year-to-date. The decreases were primarily due to lower sales at AMP in addition to lower volumes at ARS.

Consolidated gross profit for Q2 2024 decreased by $9,123 to $8,463, compared with Q2 2023, driven by volume at AMP and specifically in the defense business with additional softness experienced at the rubber molded products operations, along with a $6,049 inventory write-down related to its inventory of nitrile gloves and medical gowns due to significant downward shifts in pricing. Gross profit as a percentage of net sales decreased to 8.9% in Q2 2024 compared with 15.4% for Q2 2023, primarily due to reductions at AMP driven by volume and product mix, partially offset by improvements at ARS. Consolidated gross profit for 2024 year-to-date decreased by $16,887 to $22,636 compared with 2023 year-to-date, driven primarily by volume reductions at AMP, along with a $6,049 inventory write-down related to its inventory of nitrile gloves and medical gowns due to significant downward shifts in pricing. Gross profit as a percentage of net sales decreased to 11.4% for 2024 year-to-date compared with 17.1% for 2023 year-to-date. This decrease was primarily a result of the significant reduction at AMP's defense and rubber molded products operations driven by volume partially offset by operational improvements and margin expansion at ARS.

Adjusted EBITDA for Q2 2024 increased by 17.5%, compared to the same period in 2023 and decreased by 32.9% for 2024 year-to-date, compared with 2023 year-to-date.

Financial Position

The Company retains a $150 million credit facility and a net debt to TTM Adjusted EBITDA ratio of 4.27x (from 3.30x at December 31, 2023).

Dividend

The Board of Directors of the Company has approved a quarterly dividend of C$0.035 per common share, to be paid on October 15, 2024 to shareholders of record at September 30, 2024.

Segment Results

In the Rubber Solutions segment, net sales for Q2 2024 decreased by 13.1% to $59,001, from $67,917 in Q2 2023 and decreased by 8.1% to $124,470 for 2024 year-to-date, from $135,473 for 2023 year-to-date. For the quarter, volume decreased by 20.2% with decreases in most sectors. Year-to-date, volume was down 8.9% with decreases across the majority of sectors and continued signs of softness with many customer's operations. For the quarter, tolling volume was down 82.7% while non-tolling volume was down 12.3%. Year-to-date, tolling volume was down 60.1% while non-tolling was down 4.0%. Gross profit at Rubber Solutions for Q2 2024 was consistent with Q2 2023 and for 2024 year-to-date increased by 12.7% to $21,302 from $18,897 for 2023 year-to-date, primarily as a result of product mix improvements as the Company pivots away from tolling and focuses on more specialty compounds while managing controllable overhead costs.

At Manufactured Products, net sales for Q2 2024 decreased by 22.7% to $40,680, from $52,614 in Q2 2023 and by 24.5% to $83,021, from $110,013 for 2024 year-to-date. For the quarter, the decrease was across most product lines. Specifically, the defense products lines experienced continues softness and the rubber molded products business had lower volumes in SUV and light truck platforms, driven by economic headwinds and increased vehicle inventories which impacted production schedules across certain OEMs and Tier 1 suppliers in the quarter. Year-to-date, the decrease was due to softness in the defense product lines and weaker volumes in the rubber molded products business, specifically in the SUV and light truck platforms compared to the same period in the prior year. Gross profit at Manufactured Products for Q2 2024 decreased to $(1,806) from $7,314 in Q2 2023 and decreased to $1,334 for 2024 year-to-date from $20,626 for 2023 year-to-date. For the quarter, this decrease was primarily the result of a $6,049 inventory write-down related to its inventory of nitrile gloves and medical gowns due to significant downward shifts in pricing, along with unfavourable volume and product mix in the defense business in addition to volume reductions in the rubber molded products operations, partially offset by operational cost improvements and reduced overhead costs. Year-to-date, this decrease was primarily a result of unfavourable volume and product mix in both the defense product lines and the rubber molded products operations along with a $6,049 inventory write-down related to its inventory of nitrile gloves and medical gowns due to significant downward shifts in pricing, partially offset by continued focus on controllable operational cost containment and overhead cost reductions.

Overview

During the second quarter of 2024 (“Q2 2024”), AirBoss focused on operational execution and aggressive deleveraging activities despite economic headwinds experienced in each of its segments to varying degrees. TD Securities Inc. was hired as the Company’s financial advisor to assist AirBoss with its strategic review of various alternatives to create value for shareholders. The Company also continued its risk mitigation plans in response to the economic challenges being experienced, managing costs with the previously announced additional steps taken in AirBoss Manufactured Products' (“AMP”) defense business. The ability to recover volumes over the remainder of 2024 will remain subject to the ongoing challenges related to continued inflationary pressure and ongoing global geopolitical challenges, and successful conversion of key opportunities.

AirBoss Rubber Solutions (“ARS”) experienced some additional softness compared to the first quarter of 2024 (“Q1 2024) primarily driven by volume reductions across most sectors and saw reduced volumes compared to the second quarter of 2023 (“Q2 2023”), however the quarter was strong with respect to margin expansion. Despite strong performance during the earlier part of 2024, there was pronounced softness experienced at the end of Q2 2024 as sales were impacted by customers focused on reducing inventory levels. The segment remained committed on executing on its strategy to deliver strong results with specialized products, expanded production of a broader array of compounds (white and colour), and enhanced flexibility in attracting and fulfilling new business through identified synergies and margin expansion. As a segment, ARS continued to invest in research and development to support enhanced collaboration with customers.

AMP experienced continued softness in Q2 2024 in both the rubber molded products and defense businesses. The rubber molded products operations were impacted by continued volume softness related to the original equipment manufacturers (OEMs) shuttering production in the current quarter to rebalance vehicle inventory levels. The business continued its focus on managing costs and a commitment to drive efficiencies and best-in-class automation, as well as diversification of its product lines into adjacent sectors. The defense business experienced continued softness in Q2 2024 which carried over from Q1 2024, across the product portfolio, however this was partially offset by the additional overhead reductions carried out in the last part of the prior quarter to help mitigate the volume softness. Management continued its focus on operational improvements and completed the additional cost-cutting measures previously announced. In addition, the defense business continued to work with its key customers with a goal of leveraging opportunities aligned with its growth initiatives, subject to timing as delays in the conversion of these opportunities continued through Q2 2024 including its most recent Bandolier award.

The Company’s long-term priorities consist of the following:

1. Growing the core Rubber Solutions segment by emphasizing rubber compounding as the core driver for sustainable growth and productivity, focusing on innovation in custom rubber compounding while aiming to expand market share through organic and inorganic means, while striving to achieve enhanced diversification by a broadening of product breadth through technological advancements and investments in specialty compound niches;
2. Manufactured Products' growth strategy will be focused on diversifying and expanding its range of rubber molded products while simultaneously narrowing the range of defense products through a renewed focus on core competencies; and
3. Undertaking a strategic review of all product lines currently manufactured and sold by the Company in its Manufactured Products segment while targeting additional acquisition opportunities with a focus on adding new compounds and products, technical capabilities, and geographic reach into selected North American and international markets.
   

AirBoss continues to focus on these long-term priorities while investing in core areas of the business to expand a solid foundation that will support long-term growth.

Conference Call Details and Investor Presentation

A conference call to discuss the quarterly results is scheduled for 9:00 a.m. ET on Wednesday, August 14, 2024. Please go to https://www.gowebcasting.com/13192 or dial in to the following numbers: 1-844-763-8274 or 647-484-8814. Please connect approximately 10 minutes prior to the call to ensure participation. A replay of the conference call as well as the Company’s updated investor presentation will also be made available at: https://airboss.com/investor-media-center.

AirBoss of America Corp.

AirBoss of America is a diversified developer, manufacturer and provider of survivability solutions, advanced custom rubber compounds and finished rubber products that are designed to outperform in the most challenging environments. Founded in 1989, the company operates through two divisions. AirBoss Rubber Solutions is a North American custom rubber compounder with 500 million turn pounds of annual capacity. AirBoss Manufactured Products is a supplier of anti-vibration and rubber molded solutions to the North American automotive market and other sectors, and also a global supplier of personal and respiratory protective equipment and technology for the defense, healthcare, medical and first responder communities, through AirBoss Defense Group. The Company’s shares trade on the TSX under the symbol BOS and on the OTCQX under the symbol ABSSF. Visit www.airboss.com for more information.

Non – IFRS and Other Financial Measures: This earnings release is based on consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) and Non-IFRS Financial Measures. Management believes that these measures provide useful information to investors in measuring the financial performance of the Company. These measures do not have a standardized meaning prescribed by IFRS and therefore they may not be comparable to similarly titled measures presented by other companies and should not be construed as an alternative to other financial measures determined in accordance with IFRS. These terms are not a measure of performance under IFRS and should not be considered in isolation or as a substitute for net income under IFRS.

EBITDA and Adjusted EBITDA are non-IFRS measures used to measure the Company's ability to generate cash from operations for debt service, to finance working capital and capital expenditures, potential acquisitions and to pay dividends. EBITDA is defined as earnings before income taxes, finance costs, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA excluding impairment costs, acquisition costs, and non-recurring costs. A reconciliation of profit (loss) to EBITDA and Adjusted EBITDA is below.

In the second quarter of 2024, the Company recorded a $6,049 inventory provision related to its inventory of nitrile gloves and medical gowns due to significant downward shifts in pricing. Costs related to this provision are included in Cost of Sales on the Statement of Profit and Loss.

In the second quarter of 2024, the Company completed a series of staff reductions. Costs related to this restructuring activity are included in Other expenses on the Statement of Profit and Loss.

In late 2022, the Company negotiated improved arrangements with AirBoss Manufactured Products’ automotive business' key suppliers and customers to improve profitability. Professional fees related to these activities are included in General and administrative expenses on the Statement of Profit and Loss.

Adjusted profit is a non-IFRS measure defined as profit before impairment costs, acquisition costs and non-recurring costs. This measure and Adjusted earnings per share are used to evaluate the operating results of the Company. A reconciliation of Profit to Adjusted profit and Adjusted earnings per share is below.

Net Debt measures the financial indebtedness of the Company assuming that all cash on hand is used to repay a portion of the outstanding debt. A reconciliation of loans and borrowings to Net Debt is below.

Free cash flow is a non-IFRS measure used to evaluate cash flow after investing in the maintenance or expansion of the Company's business. It is defined as cash provided by operating activities, less cash expenditures on long-term assets. A reconciliation of cash from operating activities to free cash flow is below.

AIRBOSS FORWARD-LOOKING INFORMATION DISCLAIMER

Certain statements contained or incorporated by reference herein, including those that express management’s expectations or estimates of future developments or AirBoss’ future performance, constitute “forward-looking information” or “forward-looking statements” within the meaning of applicable securities laws, and can generally be identified by words such as “will”, “may”, “could”, “expects”, “believes”, “anticipates”, “forecasts”, “plans”, “intends”, “should” or similar expressions. These statements are not historical facts but instead represent management’s expectations, estimates and projections regarding future events and performance.
Statements containing forward-looking information are necessarily based upon a number of opinions, estimates and assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies. AirBoss cautions that such forward-looking information involves known and unknown contingencies, uncertainties and other risks that may cause AirBoss’ actual financial results, performance or achievements to be materially different from its estimated future results, performance or achievements expressed or implied by the forward-looking information. Numerous factors could cause actual results to differ materially from those in the forward-looking information, including without limitation: impact of general economic conditions, notably including its impact on demand for rubber solutions and products; dependence on key customers; global defense budgets, notably in the Company’s target markets, and success of the Company in obtaining new or extended defense contracts; cyclical trends in the tire and automotive, construction, mining and retail industries; sufficient availability of raw materials at economical costs; weather conditions affecting raw materials, production and sales; AirBoss’ ability to maintain existing customers or develop new customers in light of increased competition; AirBoss’ ability to successfully integrate acquisitions of other businesses and/or companies or to realize on the anticipated benefits thereof; AirBoss’ ability to successfully develop and execute effective business strategies including, without limitation, the recently announced strategic transition; changes in accounting policies and methods, including uncertainties associated with critical accounting assumptions and estimates; changes in the value of the Canadian dollar relative to the US dollar; changes in tax laws; current and future litigation; ability to obtain financing on acceptable terms and ability to satisfy the covenants set forth in such financing arrangements; environmental damage and non-compliance with environmental laws and regulations; impact of global health situations; potential product liability and warranty claims and equipment malfunction. There is increased uncertainty associated with future operating assumptions and expectations as compared to prior periods. This list is not exhaustive of the factors that may affect any of AirBoss’ forward-looking information.

All of the forward-looking information in this press release is expressly qualified by these cautionary statements. Investors are cautioned not to put undue reliance on forward-looking information. All subsequent written and oral forward-looking information attributable to AirBoss or persons acting on its behalf are expressly qualified in their entirety by this notice. Forward-looking information contained herein is made as of the date of this press release and, whether as a result of new information, future events or otherwise, AirBoss disclaims any intent or obligation to update publicly the forward-looking information except as required by applicable laws. Risks and uncertainties about AirBoss’ business are more fully discussed under the heading “Risk Factors” in our most recent Annual Information Form and are otherwise disclosed in our filings with securities regulatory authorities which are available on SEDAR+ at www.sedarplus.com.

Investor Contact: investor.relations@airboss.com

Media Contact: media@airboss.com